Question 4 Bohannon SA factors $ 250,000 of accounts receivable with Winkler Financing, without recourse basis. Winkler Financing will collect the receivables. The receivables records are transferred to Winkler financing on August 15, 2019. Winkler Financing assesses a finance charge of 2% of the amount of accounts receivable and also reserves an amount equal to 4% of accounts receivable to cover probable adjustments. Instructions a. What conditions must be met for a transfer/factor of receivables to be accounted for as a sale? b. Assume the conditions from part (a) are met. Prepare the journal entry on August 15, 2019, for Bohannon to record the sale of receivables.

Question 4 Bohannon SA factors $ 250,000 of accounts receivable with Winkler Financing, without recourse basis. Winkler Financing will collect the receivables. The receivables records are transferred to Winkler financing on August 15, 2019. Winkler Financing assesses a finance charge of 2% of the amount of accounts receivable and also reserves an amount equal to 4% of accounts receivable to cover probable adjustments. Instructions a. What conditions must be met for a transfer/factor of receivables to be accounted for as a sale? b. Assume the conditions from part (a) are met. Prepare the journal entry on August 15, 2019, for Bohannon to record the sale of receivables.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter5: Sales And Receivables

Section: Chapter Questions

Problem 44BE: Write-Off of Uncollectible Accounts King Enterprises had 27 customers utilizing its financial...

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